A coalition of self-described fiscal watchdogs has released a wide-ranging, 18-page report intended to lift alarm in regards to the state of St. Paul’s funds and monetary outlook, from rising property taxes to a shrinking downtown tax base.

The report — authored partially by a former city council member, a developer and former city budget director — discourages the town from investing in recent parks initiatives equivalent to the proposed Mississippi River Balcony, the Mississippi Learning Center or a regional multi-sport athletic complex until the town can “right the ship,” prioritize basic maintenance of parks, streets and sidewalks, and wean itself away from supporting projects through tax incentives to developers generally known as “TIF,” or tax increment financing districts.

“If we don’t manage to pay for to keep up our parks facilities, why are we putting within the budget extra money to construct recent facilities?” said Gregory Blees, who served as a city budget director within the Nineteen Eighties under then-Mayor George Latimer and later as a city council financial analyst. “That’s a serious frustration with our whole committee.”

Given the town’s rising debt load, the “In$ight St. Paul” report warns the town could jeopardize its coveted AAA bond rating. That may make it harder and pricier to borrow funds to pay for major construction. That could lead on to homeowners and other property owners paying even higher taxes to maintain up with higher rates of interest. St. Paul’s effective property tax rate for median-value homes — 1.39% of estimated market value — is already the best of all of Minnesota’s 20 regions, and the sales tax rate, 9.875%, is the best within the state.

During 2020 to 2023, St. Paul was the one one in all Minnesota’s five largest cities to lose population. No less than two major private employers situated downtown announced this 12 months they would depart the town.

‘Really good public education’

Town tax levy grew 101% from 2015 to 2024, while the Minneapolis levy grew 64% in the identical period, in accordance with the report. Taking a look at a rather different period, “city leaders didn’t help their constituents financially from 2016 to 2024, when the certified property tax levies increased 97.4%,” from $105.6 million to $208.5 million.

A part of the St. Paul tax levy increase, nonetheless, is offset by a discount in the town’s “Right of Way” street maintenance fees, Blees acknowledged.

The report was shared Tuesday with St. Paul Mayor Melvin Carter’s office and members of the town council by In$ight committee co-chairs Jane Prince, a former city council member, and Gary Todd, who has been energetic in fighting the town’s plans for a brand new bikeway along Summit Avenue.

“I believe the most important value of it’s it’s really good public education,” said Prince on Tuesday. “It’s information that is never all available in a single place. … In line with our findings, we now have the best property tax and highest sales tax within the state. We’re the capital city. Isn’t there a way during which the state needs to be assisting with a few of this? It’s our funds at a time once we’re facing quite a lot of challenges in the town.”

Other members of the committee include Blees; Dave Beal, a former business columnist for the Pioneer Press; Julian Loscalzo, a lobbyist; John Mannillo, a developer and former mayoral candidate; Carl Michaud, a former environmental planner with the Metropolitan Council and assistant county administrator in Hennepin County; and public affairs consultant Donna Swanson, a recent executive director of the St. Paul Police Foundation.

Reached Tuesday, city council President Mitra Jalali said she had just received a duplicate of the report and would read through it. Jalali noted that the council is reviewing the mayor’s budget proposal for 2025 with city department leaders and lots of the city’s financial challenges and opportunities could be of little surprise.

The mayor’s office noted Tuesday that the report references tax increases that don’t account for 2 court decisions that shifted street maintenance costs from fees to the tax dollar-supported general fund.

While the town’s Office of Financial Services offered to “discuss corrections and inconsistencies on financial and other data within the draft report before it was released today, we didn’t hear back,” said the mayor’s office in a press release. Town council will host a public budget hearing later this fall.

Recommendations

Amongst a number of the report’s recommendations:

• Establish a committee to advocate for more voluntary payments in lieu of property taxes from tax-exempt entities.

• Don’t approve Parks and Recreation design or construction funding this 12 months or next for any facilities or park that doesn’t currently exist, including the East Side Community Center, Mississippi River Balcony, River Learning Center at Crosby Park, a multi-purpose regional athletic complex and recent or enhanced water features citywide.

• Don’t approve sales tax bond issues until the town’s Office of Financial Services prepares a comprehensive bonding and debt service report.

• Don’t use long-term bonds to pay for police and fire public safety vehicles which have a brief shelf life and won’t survive the lifetime of the bond issue.

22 research papers

The report, which relies on Blees’ 22 unpublished research papers culled from data from five government agencies, doesn’t dwell at length on rent control or a Nov. 5 ballot query that will increase city property taxes to pay for municipal child care subsidies, however it takes a dim view of each.

The report acknowledges that many city practices — equivalent to a heavy reliance on TIF districts for economic development — predate the Carter administration or the present city council, which has seven members, greater than half of whom were elected last November. Still, the report notes that leaders are elected to confront problems, and so they say freezing spending on major projects could be a start.

The In$ight report found that city government’s staff as measured by full-time equivalents — 2,924 positions in 2016 — would grow to three,209 employees under the mayor’s proposed budget for 2025.

“Parks and Recreation is planning five recent projects … without budgeting for the added expenses of servicing them,” reads the report, which questions whether the department has been setting aside enough money to keep up existing facilities.

Sales tax, projects, tax-exempt entities

A 20-year, 1% city sales tax approved by voters last November might be dedicated to reconstructing major arterial roads like Grand Avenue, in addition to quite a lot of parks projects, but not toward fixing residential streets.

“Town has requested over $82 million in funding from the Minnesota Legislature for the River Balcony, Learning Center, and Athletic Complex together with $118 million for nine other capital bonding requests, whilst we lack funding to keep up the (public amenities) we now have,” reads the report.

Unique amongst Ramsey County cities, St. Paul spans many parks, schools, nonprofits, government buildings and other uses that depend on public services, equivalent to streets and sidewalks, but are tax-exempt.

In all, 18.7% of property inside the city — carrying $8 billion in property value, out of the $43.4 billion in total property value citywide — pays no property tax. That adds to the town’s fiscal pressures and might be addressed, in accordance with the report, if the town demanded payments in lieu of taxes, a model utilized in Boston and other cities to recoup no less than limited funds from non-taxable properties.

TIF, fiscal disparities program

The In$ight report examined “two complex municipal financing tools” — tax increment financing and the state’s fiscal disparities program. It found that St. Paul is the state’s biggest user of TIF, which allows developers to make use of money that will otherwise flow to public tax coffers to repay their development loans for improvements to blighted property.

That TIF spending has increased 40% since 2015, from $31.6 million to $44.3 million in 2024, whilst TIF obligations decreased greater than 50% in Minneapolis, the state’s second-largest user of TIF, which captures $21.5 million of taxable value in its TIF districts.

The report urges St. Paul to raised publicize how much of the town’s tax base is wrapped up in TIF, as Minneapolis does annually. “Town of St. Paul must have the identical transparency,” reads the report.

The Met Council redistributes business property taxes from the seven-county metro area’s wealthiest cities to less wealthy municipalities through the fiscal disparities program, and St. Paul is the metro area’s leading beneficiary.